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The high-tech, superconnected car of the future is coming soon--but who will pay for it, and who will profit?

The Lexus SUV barreling down Silicon Valley's Highway 101 is much like any other, save the $65,000 laser sensor spinning on the roof like a nerdy propeller beanie. Capturing 1.3 million bits of data per second along with video feeds and radar pulses, the car's computers can "see" the vehicles around us and keep us clear of them. Which is a good thing. Because no one is driving.

Google's famed self-driving car is surprisingly easy to get used to, especially as it instantly responds to a car drifting toward us while its human operator fumbles for his hat. For the man sitting next to me, Christopher Urmson, the engineer who heads up Google's self-driving cars research, it's as boring as a bus ride. He and his team have logged some 500,000 miles in the Googlemobile since 2009. His feet are nowhere near the pedals, and his mind is anywhere but on the road. He's talking about the future.

"Our plans are to make driving better, so people can do what they want to do," he explains, gesturing excitedly with his hands. "The goal here is to make the technology disappear." Google cofounder Sergey Brin told him he wants to see driverless cars on the road in five years. Mainstream automakers have been busy, too, preparing to announce their own plans for autonomous or semi-autonomous cars within the next three years. In January Nissan's CEO, Carlos Ghosn, predicted driverless cars will hit showrooms by 2020. This is actually going to happen, regulators willing.

But they are just a part of an automotive revolution that may be the most transformative since Henry Ford's assembly line. The "connected vehicle," with vast amounts of data flowing in and out, promises endless new possibilities for safety, convenience, entertainment--and badly needed profit.

"Now is the time for us all to be looking at vehicles on the road the same way we look at smartphones, laptops and tablets," says Bill Ford Jr., executive chairman of Ford Motor Co., "as pieces of a much bigger, richer network."

But if Ford and other auto executives see the technology with a Jetsons like optimism, they have darker concerns, too. Fifty years ago Detroit misgauged consumer appetites and lost its way amid an invasion of fuel-efficient Japanese cars to U.S. soil, and it almost never recovered. With 100 million new cars expected to have some form of connectivity by 2025, the companies who build and sell them quietly fret that if they don't spend billions developing this new market, they may lose it to disruptive young rivals in a pattern painfully familiar to newspaper, music and television companies. Detroit versus Silicon Valley. The war is on.

It's a battle worth waging. The market for smart vehicle systems like lane-departure warnings and collision-avoidance will be around $22 billion by 2020, estimates Ian Riches, director of the global automotive practice at London-based Strategy Analytics. GSMA, a mobile-industry trade group, projects the revenue opportunities from embedded telematics--devices that transmit data from the car--will grow to $25 billion by 2025, up from about $2.5 billion today.

Despite all the venture-capital-fueled disruptive triumphs of the past two decades--and the myriad auto industry screwups over the same period--tech companies that think they can overlay their products and then skim the profits from the car of the future will encounter stiff resistance from auto companies and their traditional suppliers like Continental and Delphi, which are pouring billions into smart-car development. "A car is not a smartphone on wheels," says the Gartner Group's Thilo Koslowski.

Then again, the "car guys" that run the industry aren't Bill Gates. And while Detroit has successfully partnered with a number of tech companies, including Microsoft, to develop new products, "I think carmakers are very nervous?they won't get rich enough on this," says Jean-Francois Tremblay, senior manager with Ernst & Young's automotive practice. "They are afraid they can lose the game."

Detroit has already seen its traditional bread and butter--new car sales--threatened by gridlocked cities and rental systems like Zipcar, which offer consumers new alternatives to ownership. Surveys show that teenagers no longer reflexively equate wheels and freedom. These telematics offer the tantalizing possibility of again connecting a car and its owner in a way that produces new, continual revenue streams to boot.

In a beige, 1960s-era office building in Ann Arbor, Mich., Peter Sweatman, director of the University of Michigan's Transportation Research Institute, meets regularly with tech whizzes determined to reinvent the auto industry. His organization last year began the first real-world test of connected vehicles, partly funded by the U.S. Department of Transportation. Some 3,000 "talking" cars, trucks and buses are cruising local roadways to determine if the technology is ready to be deployed, in the hope of preventing some of the 1.2 million traffic deaths worldwide each year.

"It's got a safety purpose--which is how to avoid the majority of crashes," Sweatman says of vehicle-to-?vehicle communication. "But clearly it has much broader implications, too." Companies like Verizon, AT&T, Intel, Cisco Systems, Qualcomm and IBM have been beating a path to Ann Arbor to investigate. Smaller entrepreneurs are sniffing around as well. "They know we have a steady stream of data coming in," he says. "They want to know how they can monetize it. It's clear to me that they're looking to see where the value proposition will be for their companies."

It's a very good question. Cars are already loaded with technology, but profits haven't yet followed. The newly redesigned Ford Fusion, for instance, has more than 145 actuators, 4,716 signals and 74 sensors--including radar, sonar, cameras, accelerometers, temperature gauges and even rain sensors--that monitor the perimeter around the car and see into places invisible from the driver's seat.

All these premium features and mandated safety systems have driven the average price of a car in the U.S. up 10%, to $30,800, since 2008, according to Edmunds.com. Yet margins remain tight thanks to the rising costs of commodities, product development and marketing.

New fuel-economy laws don't help. The average Ford F-150, for example, sells for $38,500 and has a rough margin of $11,000. But those laws, plus higher gas prices, mean Ford is selling far fewer F-150s than in the past (645,000 in 2012 versus 940,000 in 2004). Increasingly growth will come from smaller, more fuel-efficient--and lower-profit--cars like the Fusion, which sells for an average $26,000 and clears around $7,000 for Ford.

More electronics are seen as the solution, a way of persuading shoppers to buy a fully loaded Fusion, with Ford pocketing as much of the gravy as possible. The $31,000 Ford Fusion Titanium with all-wheel-drive, for instance, is already loaded with premium features. But add the $1,200 driver-assist package (blind-spot detection, cross-traffic alert and lane-keeping system), plus the $795 voice-activated navigation system, the $995 adaptive cruise control and the $895 active park assist, and you're now paying over $35,000, padding Ford's profits substantially.

From BMW to Audi to GM, every major automaker is using the same, or similar, strategy. The redesigned Honda Accord is equipped with six wide-angle cameras to eliminate blind spots. What's wrong with glancing over your shoulder? Nothing. But the unique LaneWatch feature comes standard on midlevel Accords priced $25,000 and higher, versus $21,680 for the base model. Cadillac's CUE information and entertainment system was the first to employ tabletlike gesture controls. Infiniti's JX crossover automatically applies the brakes when rear sensors detect an obstacle behind the car.

The next phase, currently in research, involves sensor fusion, where engineers learn more about the environment by blending multiple signals and adding other information from the cloud. Ford is even researching biometric sensors, perhaps embedded in a car seat, to measure stress levels for a more personalized response from driver-assist technologies, because skill levels--and thus stress--can vary in certain situations.

"So far we've just scratched the surface of what is possible," said Paul Mascarenas, Ford's chief technical officer.

For the most part consumers have gone along with all this, shelling out blindly in much the same way they've added hundreds of dollars a month to their telephone bills thanks to the smartphone revolution. Yet they may be reaching saturation. J.D. Power & Associates surveyed almost 17,000 vehicle owners, asking them what they really wanted out of car technology. The desires were overwhelmingly pragmatic. Top on drivers' lists: They'd like their smartphone to work in their car as seamlessly, safely and affordably as it does elsewhere.